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tv   Washington Ideas Forum Day 1 Afternoon Session  CSPAN  January 11, 2015 12:27am-12:47am EST

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that. and it takes two parts to organize that. it takes some series of change in the cost matrix of the university so cost less to run. during the recession, the beginning of the recession i eliminated two vice presidencies presidencies, took my salary cap, and other things to reduce costs but that wasn't enough. the other end was to increase revenue. a lot of it was tuition and some with financial aid. let's talk about the other half of which are asking and that is the path between the rhetoric and how much was raised. it cost will be $50,000 in tuition and fees to go to an institution like cornell, a little bit more than that but let's call it $50,000. if a person wants to donate a scholarship in an endowment that would last for ever and in perpetuity about the student -- allow the student to have a free ride through cornell, that's $1 million contribution that will yield a number earnings of about 50,000 a year -- $500,000 -- $50,000 a year
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and that's about the cost of going there. $1 billion, huge amount of money. but if another country better wishes to contribute to a capital project, construction project, and we're fortunate enough to get $59 or $100 million or $200 million gift that greatly outweighs the balance. but the bottom line is that i'm guilty as charged. we somehow should have found a better way and still need to balance shrinking the cost matrix, and some of bringing more revenue in. and not basing the revenue increase so heavily on tuition which is been the most obvious lever to pull for revenue. so yeah, we need to keep pushing. when i have run into people who want to contribute and don't have a specific idea what they want to do, my top order is -- top priority is always student aid because of my own background. but i didn't do enough, either on the cost matrix side or the revenue enhancement side. >> before we leave because we getting out of time, i'd ask him this is a man who plays the flute and has played on stage with billy joel.
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and you said you have stage fright. >> i'll tell you the problem with the whole billy joel and since were bragging about me in which i like, i've also set in twice with winston marsalis. both apparently have lost my cell phone number. [laughter] because, and when i saw mr. marsalis recently, i said, as people my age do, call, you don't write, i don't hear from you anymore. and i was going to be a studio musician growing up in l.a. and it turned out much to my disappointment and chagrin that everybody in l.a. was a better musician than i was. i still do it as an application. -- avocation. i do it to the to i enjoyed a lot of taking the video course which is very instructive. and playing a little tiny bit as you were talking about of classical music slowly to i will make it very hard for you ever did what that sounds like. >> it's on youtube. [applause]
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>> more from the recent washington ideas for him. an interview with paypal cofounder. mrs. 20 minutes. >> thank you, peter, for joining us. we will move briskly and we have a lot of ground to cover. let me put it to you directly. you have created controversy with your claim that innovation is slowing down. is this an assertion or is it based on data? >> it is hard to measure technological progress we have. there is so much under the rubric. my claim is that over the last 40 years since the 1970s we have
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continued to have very fast progress in the world of computers, internet, mobile , internet and that whole ensemble of things. we've had a much less progress in just about everything else and so a lot of things in the 50s and 60s, supersonic aviation, space travel underwater cities, desalination plants turning deserts into farmland or forced into the green revolution by a culture that has been bob as much progress. they even consider the technology today. and so we have a very narrow cone of progress and it is i think reflected in a general sense of stagnation. in our society. where median wages have not gone up that much in the last four years. so even though people in the technical industry and the science industry are always , always super bowl us always
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-- super bullish always pumping their companies and inventions and research into the venture capitalists are guilty of this and so you always have to discount a little bit of that. >> in your book "zero to one," and your investing life, you are disdainful of incremental progress. you urge that people should seek big changes. let me push back on that. in the area of transportation, for example, you look at the window and the technologies that are conceptually identical to 100 years ago. the planes and trucks and trains, they are the same. but then you look at the costs. the cost of moving goods has dropped by over 90% in the past hundred years. the safety with which we move people -- the chance being killed in a car accident are one 17th of what they were in the 1920s. and humble technologies like a container may have contributed more to the globalization and
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all of the amazing things you do in the silicon valley. isn't there -- karl marx said that at a certain point the changes in quantity become changes in quality. can you explain why you think those things are less important than the kind of visionary things you talked about a moment ago? >> there are certainly a number of these that have an effect of being an incredible valuable. in my approach, in many ways, a how to advice book for people who are going to start companies and if you want to start a successful company you want to do something nobody else in the world is doing it. and where there is a significant difference between what you are doing and what everyone else is doing. and i think software has been characterized by these fairly large breakthroughs which is why people in software is made so much money. it's not because of the valuables but the economics of software are very monopoly prone
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and a very lucrative. and i think that the very disturbing history of innovation is that the inventors and scientists and technologists never made any money. the wright brothers didn't make money, tesla made no money and even if we go back to the steam engine and the first industrial revolution. from 1780 and 1850. even in the 1850's, most of the wealth was held by the landed aristocracy. the people that started the textile factories, it was all competed away. i think if you want to start a very successful business that makes a difference, that is the thing to do. in the 1980s you could describe it better than anything else but then it would be superseded one and a half or two years later and over the course of a decade
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they lost all their money. these are different narratives at work. >> that is a wise financial had. there is all the difference in the world between the great investment and company. so, when you talk about these concerns of yours, you're talking about them from the point of view in the technologies and not from the -- all investors in the technologies and not from the point of view in the business or the consumer. >> well, it's all of the above. certainly if we build more breakthrough technology there will also be valuable to society. that is one modality of how things progress. you could make a lot of progress through the incremental innovation. i would argue that most of that happened in the first half of the 20th century and it's been slower in the last 40 years even in many of these incremental areas. >> when you talk about the slowdown what you are really lamenting is the fading of what might be called big engineering schemes. superhighways.
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you talk in your book about the project somebody developed to turn san francisco bay into a freshwater lake. i was startled that was your point of view because what drove the heyday of big engineering is the heyday of state power and whether it was the new deal in the united states or mussolini or the soviet union or italy. with the application of the state's power on a massive scale that made these things possible. and what prop them into the era of the big engineering is the set of ideas that i would have thought he would have endorsed. it was jane jacobs overcoming robert moses and saying that your big engineering project only exists because you've overridden property rights and it is because you haven't done your cost accounting properly. and if you actually had to pay every urbanized and whose house you just demolished in the name
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of urban were no and -- renewal, and if you have to pay all of the farmers and all of the fishermen whose livelihoods are taken were taken away by turning san francisco bay to the freshwater lake you would see that it made no sense. the project never made sense except the point of view of the central government state. >> i'm somewhat partial to robert moses and i think that ever since jane jacobs won the battle in the 60s there is a sort of tricky trade-off. i think we can distinguish three different modes of innovation . our breakthrough point technologies which we still do occasionally and then there are things where you involved complex coordination getting a lot of different pieces to work together in just the right way and that is a form of progress we used to do that we don't do any more. part of it, you are right, is. it -- is government. like the manhattan project or the apollo space program i think a lot of it had a private sector field.
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so the 19th century and early 20th century america was dominated these engineer schemer type of people that had some complex plan to build the transcontinental railroad or a canal through pamela or all sorts of things like this and ford motor co. company was an integrated complex monopoly. and there are sort of interesting companies like that that are being done but they are notable for their rarity. so you ask what did tesla do that is new? the electric car company. it is not that they invented a single losing but that they combined a bunch of different things together in just the right way to create a dramatic and a better car. this is also a big part of what steve jobs did successfully when he had the apple computer to the electronic company the original iphone and ipod. there was no single massive breakthrough. it was not really an incremental improvement or certainly incremental improvement it
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wasn't a point breakthrough but there was a complex coordination. so i think it is a modem modem -- modality of the of progress that is underexplored. i am politically more libertarian and so i am skeptical of the government being able to do these things but not in the absolute sense. i think our government was able to do them in the 30s and 40s and 50s and the way that it's no longer does today. this is a very important policy question we should think about really hard. today, a letter from einstein to the white house would get lost in the mail room and there is a sense that we couldn't do apollo . and whatever you think of the affordable care act, i would maintain that an internet website is a demonstrably inferior and simpler and easier technology been building a rocket to send someone to the moon so there has been a strange decline that we need to think about really hard. >> you are conscious that the
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pattern of growth in the recent american economy has left many americans behind. there was a survey released by a solid polling agency that reported 45% of americans say their personal finances have not recovered to where they were before the financial crisis. this is something that preoccupies you. can you suggest and maybe i'm putting you too much on the spot. one policy change that might make a difference for the 70%, 80%, 90% of americans who are not experiencing the benefits of economic growth. >> well, this is very -- i think it is three separate debates. the inequality debate. one is that is it happening, and i think the answer is broadly yes. and then there is a second question that includes why is this happening and that is a different question. questions that start with the
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word -- letter -- word why are hard to answer. the answer to that is determined that there is a number of different factors that need to be sorted through very carefully and then there's the question what do you do about it. if i had to answer the why question, i think we tend to put too much blame on the technology that displaces workers and not enough on the challenges of globalization so i think the competition from people in china and india has been a greater source of pressure on the middle class than the replacement by computers and the simple reason for this is that people are much more like americans than computers whereas they are fundamentally complementary and not really substance. i think we tend to scapegoat the technology and downplay some of the challenges with the globalization. i am not against globalization i ended -- and in favor of it but i think that's where a lot of the challenges come from. from the policy perspective that is quite challenging.
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>> i'm not asking you to solve the whole problem but just suggest one thing. [laughter] >> again, i would say the thing people experience is a stagnation of not getting ahead and in places like new york or silicon valley, one of the main manifestations of this is the incredibly high cost of housing. so if we could turn the affordable housing back into something that was a real thing rather than just this weird racket that people use to get the zoning permits if we turn it into a good thing the interesting question is why does the housing shift to and -- from something that would seem as a consumption good -- was seen as a consumption good to something that is seen as an investment we are happy of the housing prices go up and disturbed if they go down and i think that we should shift our
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perspective on housing and see it as a consumption good and something that you want to produce much more cheaply. i would be much less restrictive on zoning laws. >> you are joining the fray in an intense way with your feelings on higher education. you are the older of a distinguished degree. i want to get to the bottom to make sure that they understand the nature of the critique. is your complaint that students are studying the wrong thing or is your complaint is that they are getting too little value for the money? and if the former, because you are skeptical of the value of the humanities degrees, is there a risk that we are being blinded by the value of elites. i just talked about the 1.7 million bachelors degrees in four year degrees in the typical gear.
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it's up to 6.7 million in the business or commerce. >> my focus is the elite universities because i think that is what sets the tone of the template in a society. and i think that there is a problem where people are incredibly crtracked into these places and then our townspeople all go to the same schools ended up in the same list of careers so there is an autobiographical per to this where one of my friends wrote i know that during you are going to make it into stanford in four years. i got into stanford law school and ended up at a law firm in new york from the outside was a place for everyone to get in and of me outside for everyone to get out. after i left overs after -- seven months to do a better of interest. but the reality was all you have to do to go out the front door
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and never come back the identities were so wrapped up in the competition it's not about a learning but a tournament. and so if you are running one of these top universities and want to get fired up the next day. you want to sort of get the students, alumni and faculty to run after you with pitchforks to one thing you should propose is to double the enrollment. and why shouldn't harvard double or triple its enrollment? now you have 7 million people in -- 7 billion people in the world and they are not doubling enrollment because the model is not to educate people commits to be a studio 54 where we have a large velvet rope with a limited number of people that get in. and i do not think that there's a right way for us to think about our future. it shouldn't be that you go to yale or to jail.
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we have to create more alternatives for our society. [applause] >> we have a minute and a half but i don't want to let you go past that so quickly. for many americans, it remains true that a university degree is a pathway to the middle class. we are not talking about the super elite. we are talking about the broad. maybe it would be true of 100% if 100% of americans but so long as 35% but for the 1.7 million people who do every year that makes a huge difference. are you really telling them though? are you telling them don't study english? >> i don't want to talk about those people because if they fall through the cracks, they are in trouble. that's why i'm focused on the students at the elite colleges because it is much less risky for them to try some other things. i do think we have very tricky questions, why is that there is

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